Saturday, April 28, 2007

Tired? Need Sleep? Want a Break?

If you see something rotating – go home, you need a break!

Recent studies suggest that the current economic meltdown is taking a toll on America's best and brightest, producing record numbers of bankers, attorneys, and executives seeking help for depression. So, if haven't been working hard and the circles are still spinning, get some help!

Click on image to enlarge.

Wednesday, April 25, 2007

Investment Banking Recruitment Clips

Tuesday, April 24, 2007

Bulge Bracket

What does a Junior Investment Banker do?

In addition to being on the company brochure, you get asked to present in front of a group of prospective interns who are coming to visit the firm tomorrow. You get given the boilerplate firm standard slides, so you decide to make some notes to amke sure you get it right.

Click image to enlarge.

Monday, April 23, 2007

Why Senior Bankers Don’t Retire: The BA Black Card

It’s the second week of the month and Wednesday, which means its time for the European firm wide meeting and conference call at 8:30. The meeting takes place across all the European offices of the firm by audio / video conference and in the main amphitheatre in London. This is the one occasion an analyst has to be seen by senior management, so rain or shine, one wears ones best suit, best shirt, buffed shoes, combined with a clean shave and haircut. These guys don’t care about pulling allnighters. Been there, done that, and got plenty of T-shirts. They are the most important partners in the franchise and they make organization spin.

They passed the point where compensation was important long ago. They all sit on personal fortunes substantial enough to not have to work ever again. They are almost all former analysts and associates of the firm, who rose through the ranks and gained the respect of the organisation in record time. They are, in short, the pride and joy of the firm. Its present, its past and its future. They are the deep bench of talent that will take the firm from great to greater and beyond. They are also barking mad.

For guys that don’t ever need to work again, these guys are pretty damn gung ho about generating revenue for the firm, seeing clients and getting on a plane to fly halfway around the world to attend a one hour meeting and then getting the next plane and flying halfway round the world back. Do they need to be in the meeting? Not really. Are they indispensable? No. Would anything change without their presence? No. Ok. These guys evidently don’t need to be at ten different places at one time for the good of the firm. No.

Ok, maybe its frequent flier miles. They’ve gone from blue to silver to gold BA cards and they need to be in the air 24/7 to finally get an invitation for that coveted BA black card. Yes you got it. Black card. It’s not on If you ask the helpline about an upgrade from your gold card, they’ll say that there is no such thing. But believe you me there is. The black card is by invitation only, and was set up in the old days, when bankers and executives used to jet back and fort across the pond on Concorde to New York. It gets you through immigration, security and the works along with the crew. More fast track than the fast track (although with BA nowadays that isn’t to hard to achieve if you fly from terminal 4 at Heathrow). Having said that, you’ll probably still get asked to take out your toothpaste and mouthwash by security even with a black card.

Delving deep into the senior banker’s psyche, you begin to understand. These are hotshots that have risen from height to height, from the humble level of analysts. The images of some shithead associate telling them to check the book for typos and telling them to triple check the net debt on that one comp because it can’t be right are hard to wash off. Not even when they themselves became that associate and handed down shit of greater magnitude to overcompensate, could they wash that off. Not even as EDs and MDs could they wash it off, because no matter how high they climbed, there was always someone higher up to shit on them. Now that they have reached what can in most mortal terms be called the op of the investment banking pyramid, there are always the clients whose asses they have to kiss ahead of them, and even worse, the shareholders! So now you understand, how a little black BA card is the holy grail for these creatures of finance. It is the key into the exclusive world of the uber executive where few clients are able to tread. Where not many a stockholder can reach them. Where, when they get asked to take out their toothpaste, deo and mouthwash at Heathrow airport, it will be with the knowledge that the person asking them to do so knows what a superfluous request this would is - these are the true BSDs. They don’t need deo, a toothbrush and mouthwash. They don’t carry luggage. They jet from city to city, attend meetings and jet right back. They are the true masters of the universe. They are the BSDs that sit on the other side of the line that separates the mortal world of investment banking and the twilight zone.

Sunday, April 22, 2007

Sartorial Tutorial

Waiting for a batch of presentations to print at the print room so you can go home, you scroll BusinessWeek for something worth poking fun at, when you come across an article giving sartorial tips for would be investment banking job candidates.

The article reads that you need to spice up a dark pinstripe and white shirt with a power tie in maroon or red. Being rather taken aback by the fact that a someone is recommending wouldbe investment bankers to look like essex boys with a makeover, you finally get over the fact that the you are most displeased at the mediocrity of the suggestion. You take another look at the picture of what an investment banker is supposed to look like, and you decide you've had enough. You write to BusinessWeek, suggesting they check with The All Nighter's article on How I-banking is like Barbie for the true i-banking look.

You dread seeing an army of intens this summer marching in in black tacky pinstripes, white shirts and maroon ties, so being the constuctive, problem-solving, thinking out of the box, individual that you are, you venture out for more on the investment banking look.

The phone rings, and its a call to let you know the books are ready. You go downstairs, pick them up and grab a cab to deliver them to Rupert for his meeting on Monday. It being a Saturday, you decide to do some proper shopping along the way. You decide to shop for the perfect i-banker candidate outfit, take a picture of the finished product and plead with BusinessWeek to revisit their suggestions before it is too late.

First stop, get a tie. Now you may be thinking that Hermes on Bond Street is pit stop number one. No! An intern should never wear an Hermes tie. This is a privilege for full-time employees of the firm. Also, when the intern performs well, by already owning an Hermes tie, they take the boss's pride away, when they buy them an Hermes tie at the end of the internship. So off to Old Bond Street and to ferragamo you go, getting off on Regents street and instructing the cabbie to wait.

You walk into the Ferragamo shop on the corner and browse through printed silk ties with the unmistakeable Ferragamo pattern. Not large and distinctively in your face enough to be a Hermes, but a tuch more geometrical and smaller motif size. Perfect for the intern. From far, the tie looks unobtrusive and will ward off comments from other jealous interns about the intern in question splashing his money around, whilst obvious enough to the trained analyst eye to signal that said intern has potential to upgrade money spending skills to higher ticket items. You finally pick out a fairly neutral bluish piece and take it to the counter.

Next stop, up the road to Ralph Lauren. Perfect place for an intern to get a shirt. You walk into the multi storey store and head straight to the first floor, where the purple lable stuff sits (if one is to buy a pony and polo player emblem shirt, one might as well go to NEXT or the GAP). You look around until you find the right piece. Creamy white, full cutaway collar, cuffed to appeal to a Brit interviewer and just about perfect. Happy with the selection you make your way to the counter.

Next stop, shoes. Off to the King’s Road and Tim Little for a pair of hand made shoes. Keep them clean, conservative and a perfect fit. Yes, perhaps the £1,350 tag is a tad much for a single pair, but you are soon comforted by the fact that the next pair will cost less. You are also comforted to see that the heels are not fully coater with rubber (only the corner in the back). You sit for a measurement and spend another two hours finalizing the style and walk out with a smile on your face, knowing that in a few weeks your brand new shoes will be ready to wear.

Happy with your day’s purchases, you tell the cabbie to take you home. You get a call from Rupert whilst in the cab, asking why the books are so late. You explain that the cabbie got the address wrong, and came back, so you had to call another one and send them again. Perfectly reasonable and having reassured Rupert, you get out of the cab, confirm the delivery instructions and get home.

Final touch. You call your tailor to confirm an appointment for Monday. He’ll come to the office. 10AM.

You recap on the day’s work. Damn it feels great to be an i-banker.

Tie. Only £70?
Shirt. Below £200 Bargain.
Shoes. Hand made for £1,350.
Looking like an Investment Banker. Priceless.

Friday, April 20, 2007

The Kruelberg Kretin Saga – XI: How Blunderstone Adds Value

It’s 8AM. Sharp. You’re sitting in a conference room at Blunderstone’s offices, waiting for your interviewer to come in as you go over the scrap notes on the firm, their investments, and all the press clippings you have read on them over the weekend in your head. You know everything there is to know about Blunderstone.

Say they ask why you want to work for them. You don’t really know, that’s true, but you at least know the answer they want to hear.

Say they ask what was their most noteable deal. You couldn’t give less of a fuck, but you know their top three and have a speech prepared discussing why you can’t pick just one deal as a favourite.

Say they ask what in your career as an i-banker has prepared you for potentially working at Blunderstone? You know the answer is nothing, but you have countless anecdotes and skills that you can pull out of your hat that will be guaranteed to tick the box of excellent skillset on the interviewer’s checklist.

Your interviewer finally comes in. He’s a Patrick Bateman type, ex i-banker, who unlike Frank, who is more of a Danny DeVito midget with a beer belly type, this guy looks sharp.

After a very brief introduction, and hearing that this guy called Ingo van Abee used to be an investment banker at Lemming Brothers, he pops the shocker question. An out of the blue, out of the box, and out of anything you could have possibly thought would come up, when he asks:

“So, how do we add value to companies in private equity?”

You think long and hard, go through the case studies of deals you read through preparing for this interview, the deals you worked on for private equity clients and anything private equity related that you can possibly remember, and all you can really think of is.

“Well, buy low sell high.”

You’re faced with Ingo’s cold stare for a few moment, after which a smirk and then a smile appear on his closely shaven, ice cold private equity face.

“Very well answered. I’ve had people interview here and spend half an hour explaining how we add value through growing revenues, expanding profitability, using debt and paying it off with the company’s own cash and here you are, hitting the nail right on the head. BUY LOW, SELL HIGH. I’m recommending you for the next round.”

Your jaw drops and you spend the remainder of the interview chatting about the weather and shooting the shit. Definitely a good start to the day.

The Kruelberg Kretin Saga – X: Blunerstone Returns

It’s 4:37 in the afternoon and you get a call on your mobile. Withheld number. You pick it up and hey presto.

“Hi, it’s Rebecca Nicholson from Assbury Moron.”

There’s a positive sounding ring to her voice. You can’t tell if it’s the fact that it’s Friday and she’s already packed her bags and ready to take the Eurostar for a shopping weekend in Paris or whether she has something genuinely good to tell you. A trickle of sweat drops onto the desk from your forehead, in anticipation of the make or brake news from Blunderstone that she surely has called to deliver.

It has got to be good. It must. She wouldn’t be so churpy if it weren’t. This is your future she has in her hands. She wouldn’t. Or would she?

“Hi” you reply with a somewhat shakier voice than you intended.

“Can you speak?”

You stand up, walk to a spot where everyone who noticed the suspicious call will at at least not be able to hear the whole conversation.

“Yes, go ahead”

“How are you today? Excellent weather we’re having no?”

This woman is barking mad. There she is, making a call that can change your life completely, and oh so typically English, she begins by speaking of the weather.

“I’m good. Busy. Very busy.”

You posture, pretending you’re super busy and the whole world wants you to advise them.

“Excellent. We’ll you’d better get busier, because Blunderstone want to see you again! You really impressed them”

You jump for joy, thank her and race to your desk. Nobody can tell you’ve just gotten a call from a headhunter. Oh no. Nobody can tell you’ve just gotten good news from a headhunter. Oh no.

You open your diary and pencil in. 8 AM. Monday. Blunderstone offices.

Thursday, April 19, 2007

The Kruelberg Kretin Saga – IX : Back to Basics…

As you stare into your computer, a new mail message pops up in the corner of your screen. It’s from Jennifer from HR. Shit, you think to yourself. This reminds you of the call you got from her, thinking she knew about Blunderstone (see The Kurelberg Kretin Saga – Episode VIII: Competence).

Knowing that you’re not going to make the mistake of crediting HR with intelligence for the second time, you pop open the email and right you are. Nothing to do with Blunderstone whatsoever. HR wants to showcase you on the firm’s recruitment brochure, for which you will need to write a piece on your job and what you do. To be exact, she wants you to describe your job as you would to someone at a bar.

Hmmm. You think to yourself for a moment, struggling to put yourself in the situation. You can’t remember what a bar looks like (thanks to Frank fucking Kruelberg fucking Kretin fucking Johnson). You think really hard and refresh your memory of the last time you went out. Ah. It’s all coming back to you now. The firm Christmas do. Talking to people at the bar. Getting asked what your name is and what you do. Replying that your name is Bob and you’re a photographer from LA.

That’s weird. Why would HR want to publish the bullshit jobs you pretend you do in a social context so that people don’t think you’re a boring finance geek or a wannabe Patrick Bateman American Psycho man? That is really stupid. Even for HR.

You begin typing your reply when it suddenly dawns on you that what they’re really after is the answer you WOULD give if you didn’t feel the need to lie about what you when you’re outside work! Ok. That’s easy. They want the geeky answer. You crack your knuckles and begin to type.

I advise corporate clients when they want to do anything.

If they want to buy another company, I advise them on how to do it. I also charge a percentage of the value of the company they buy. The more the client pays for the company they buy, the more money I make. I naturally, try to make sure they pay as little as possible. Naturally.

When they are getting ready to buy the company and they realize they need to raise money to buy it, I am the guy that tells them how much debt they should get. My bank gets a percentage of whatever amount of debt they get, so again, I will naturally advise them to raise just as much as is necessary. Naturally.

When they’ve bought the company, and they realize that somehow, they have too much debt on their balance sheet (which firstly, I don’t know why or how this happened and secondly, it’s not good), I advise them that they need to raise more equity, to set off the loads of debt ‘someone’ got them to raise. My firm will also get a percentage of any equity amount that the client raises. Naturally, I am as always going to advise them to be prudent and not raise too much money.

Sometimes, clients realize that they simply have too much cash from both the debt and equity they have raised) that they are just sitting on. This is not very good, so they call my firm up to give them some ideas of what they can do with this cash. This is where my boss tells that I need to put together a book with all the possible companies they could buy, merge with or do a joint venture with. This is a highly important task. This is what I do most of the time. I make the most amazing and informative company ‘profiles’. These profiles go into books that are sometimes over a hundred pages long and list countless acquisition opportunities, that the client glances over and almost always rejects.

After the client has sat on all that cash for some time, their shareholders begin to get annoyed. Why? They gave the company their cash in return for shares and the management isn’t doing anything with it. What happens when shareholders get annoyed? They want to sell their shares. So, a private equity buyer like Kruelberg or Blundestone puts in an offer for the company’s shares. This is where I come in again, because the company needs a banker to advise it on how prevent anyone who wants to buy the company from actually doing so, and making something of it. It’s my job here to 9for a lot of cash) prepare a big document that basically tries to come up with reasons why shareholders should not sell their shares to the private equity house. Usually, there are no good reasons, and even when there are, other less objective reasons work best:

“Keep the company in British hands. Don’t sell to the Yanks!”

“Our bankers say that they aren’t giving you a good enough deal!”

In short. I do many, many things that companies can do themselves and in the process make loads and loads of money. I’m an i-banker.

Wednesday, April 18, 2007

The devil is in the detail

A fellow monkey is confused by a couple of technical questions, so you decide to enlighten them:

1 - Why shouldn’t two companies merge?

Because one is private and the other is public, so the i-bank will make more fees by IPO ing the private one and THEN advising on a takeover: double whammy.
Alternatively, because both companies use your i-bank as an M&A advisor, so if they merge, you'll only be able to avise one party creating work ang giving league table credit to another ibank, letalone the fact that as far as management at your i-bank is concerned, you have swapped short term M&A fees for all the future cash the bank would have gotten from one of the companies.

2 - Give me an ideal Debt / Equity ratio...

This is a bit of a chicken and egg situation,a nd it all depends on what the client wants to hear. Example: If client believes they have too much debt, you advise them to issue more equity (and make sure that they issue too much equity in an offering / private placement / etc). Before any other bank has a chance to pitch to them, you go and pitch releveraging the balance sheet on the back of all the equity they have. Once they do this, you pitch a mega acquisition to use all the cash they have lying about and doing nothing with. Once deal is done, and markets turn bearish, you come in to restructure the acquisition, spin off the company you advised them to acquire, restructure the debt you raised for them and virtually take them to square one. Square one, well, square one, plus loads of equity + debt + M&A + restructuring fees for the bank.

3 - Can you calculate comps with negative EBITDA?

Yes. A / B = C. If B is negative, so will C. Can you calculate it? Sure. Does it mean anything? Of course not. The bigger question here is whather calculating Enterprise Value / EBITDA or any other bullshit metric means anything. At the end of the day, why does it matter if you're advising a client on buying a company that all the comparable companies trade at 6.0x EV / EBITDA when you know there's some crazy private equity cowboy out there who's going to pay 7.0x? What do you do? Do you really foresake the fees and say they shouldn't pay 7.1x and win the deal and fees for you? Of course not. You madssage the numbers, add synnergies to the EBITDA, make deductions from the EV, do whatever you need to to make it look like you are paying 5.9x when you're really paying 7.1x and them tell the client they are gettign a great deal. You get your fees. Cleint management gets a big bonus from for securing a good price from sharesholders. Everyone wins, ahem, apart from shareholders, but why do they count?

4 - If you sell a PPE for 100, BV of 50 and you had a note payable of 50, how do you make entries into the balance sheet?

This is an irrelevant question. If you masagged your numbers well enough to get the client to pay 7.1x (see 3) whilst making it look like they are paying 5.9x, nobody will care what your balance sheet looks like. So, hard plug whatever you want, make sure your multiple shows 5.9x and go for a beer.

Tuesday, April 17, 2007

I-banking is like Barbie

Blunderstone aside, your focus being on a meaningless meeting you have gotten roped into because, frankly, noone else in the firm could be bothered to go, so Gianluca, a smelly director from the media team has roped you into coming in.

The client, a major UK plc has its offices in the centre of town, so you take a black cab only to find that the heavy traffic will get you nowhere. You pay the friver, get out and decide to walk the remaining stretch.

As you pass Selfridges, you gaze at the barbie and Ken displays they have in one of their windows and it all starts to make sense. You see yourself, as the firm sees you. You look something like this.

Your perfectly fitted custom made suit, crisp white shirt, light blue tie, black laceups, leather carrier bag, which ahs recently replaced the scruffy firm standard gym bag you received when you joined, which by now is well worn and the colours have faded from washing.

You are an investment banker, just like little ken here. Clean shaven, sharply dressed, able and young, and another off-the-shelf resource of the firm.

The firm, then, you reslise is much like a spoiled little girl, collecting her barbie dolls ad infini until one day (in a bear market), she decides she's got too many i-banker analyst Kens. She'll decide to give some a of them a haircut, buy them a new outfit and promote them to associate Kens. And some, sadly will end up in Oxfam.

So what's all that hoo ha about an i-banks most valuable resources walkign out of its doors each eveing. You're tempted to dispute this universal truth, when you realise, that it still, very much holds firm. You and the other monkeys stay in the office each evening, well into the wee hours, later than most of the staff have left for the day, which leads you to the inevitable conculsion that you must not be the bank's most valuable resources. The thought of plankton at the bottom of the ocean fills your head as you head to the client meeting.

Bullshit Bingo

Getting ready for the conference call:

Step one:
Prepare a four by four square, randomly filling each cell with one of the below phrases / words.

bottom line
double check
margin expansion
impressive growth

Step two:
Tick off each block when one of the phrases is mentioned

Step three:
When you have ticked off four boxes in a row, column or diagonally, stand up, bang your fist on the table and shout "BULLSHIT!"

Tuesday, April 10, 2007

Glossary of Investment Banking


The analyst is the lowest form of life in the banking organization. In a desperate attempt to stop being the lowest for of investment banking existence (remember, interns do not officially exist), analysts are often classified into ranks. Analyst 1 is thus an analyst who has been in banking for one year, Analyst 2 for two and Analyst 3 for three. There are no Analysts 4 in a bull market. By the time an analyst gets to be an analyst for the fourth year in a row, a number of life changing transformations happen. The first one is the metamorphosis into Associate. The second is jumping ship and going to work for one of the sorry companies the analyst has been working for. The third is moving to a private equity house or a hedge fund. The fourth, which is preceded by being called a dumbass, is getting fired. Note that option four only happens in a bear market. In a bull market, getting fired is replaced by proportion to associate.


The associate is the next lowest form of i-banking existence following the analyst. Most associates in London are promoted analysts, so they usually know the shortcuts and tricks analysts pull because that's exactly what they used to do. The good associate will not give a fuck, whereas the bad associate will. All associates are bad associates. Associates are always keen to get on the good side of important people (the “ass” in associate in not there by chance – it’s in fact part of the job description – kissing ass is what they do). See Posturing.

Bear Market

State of the market when the 18 year old sobers up and realizes that i-bankers have charged him a lot of money to make very poor investments. To set things straight, the 18 year old hires more i-bankers to sell off his "non-core" investments and restructure, creating more fees for i-bankers.


Bullshit per Minute. The industry norm measuring a banker's ability to awe clients. The more bullshit a banker utters in the course of a limited time period 9a minute) the more (s)he is able to amaze the client. This effect is achieved by ensuring the BPM is above the cutoff threshold, beyond which a client does not have the opportunity to think in between individual pieces of bullshit uttered, and thus does not have the ability to realize that what is being thrown at them by the banker is complete rubbish.


Big Swinging Dick. Also known as a master of the universe. Term broadly used to refer to a financier of some rank that is more feared than respected in the banking community. BSD status is not a proxy for competence. Quite often, BSD status and incompetence go hand in hand. See Posturing.

Bull Market

State of economy where investors are bullish and are willing to deploy capital into transactions that generate fees for i-bankers. Corporations behave like a drunk 18 year old on speed that had just gained full access to his trust fund. Fortunately for the bankers, the 18 year old cannot make decisions for himself and has more than enough cash to pay bankers to make (poor ones usually) for him.


Can be a variety of corporate entities spanning from public corporations, provide companies, governments, private equity funds, and even individuals. What all these entities / people have in common is that they are all foolish enough to hire an investment bank to do something that they can very easily do themselves. In most cases, with the quality of advices usually provided to clients in a bull market, clients are the suckers who would be better of not having hired anyone and not having obtained the poor and often wrong advice. The result of too many clients being created by too many entities / people hiring investment banks is a bear market when the shit hits the fan.


Officially stands for Human Resources. Also called Human Capital, but universally known as HR. These are the people that hire, fire and administrate the armies of bankers in the city. These are the people responsible for pressing the send button on the mailmerge responses university students get that read "After careful consideration, we have decided not take your application further". After careful consideration my arse. They really couldn't be bothered to read all the applications, so randomly picked the number of slots they needed, and the emailed the rest of the applicants. See Competence and Luck.


The lowest form of investment banking life in existence. Correction, the intern does not qualify as a form of life. The intern is the i-banking equivalent of plankton at the bottom of the ocean. It's tiny, insignificant, plentiful, but without it, the great investment banking machine would grind to a halt. For all official purposes, and not the least for headcount, the intern is the invisible resource that quite literally does not exist.

Leveraged Finance

Eevery self respecting i-bank has a leveraged finance team that caters to private equity buyers' need for debt (see definition of LBO). Here's how it works. Private equity guys want to buy a company using as little cash of their own (real money). They hire an i-bank to do the “advisory” on the project. They then tell the i-bank to push their leveraged finance team to lend crazy amounts of money (funny money or other people’s money) to them so they can actually make the acquisition work. They then sit on the company and weather out a downturn, waiting for another crazy private equity guy top come along and but the same company from them in the same way.


Stands for Leveraged Buyout. That's L for leveraged, B for buyout and erm, that's it? What does the O stand for? Overpaying. LBO's are a means for private equity houses to nuy very very expensive companies using other people's money. Here's how it works. You buy company A for 100. You only put 20 of your own money and borrow the difference of 80 from banks. You own the company for five years (the period required for a bear market to come and go) and sell the company for an even more inflated 150 to another private equity investor. Result, you pay 20, and walk away with 70 (150 that the other investor pays you minus the 80 you borrowed to buy the company in the first place) in 5 years! Also known as OPM or Other People's money. Also see Kruelberg Kretin Capital Partners.


A staffer is the illegitimate love child of an associate and an MD. Unlike with mammals, this creature is conceived by excessive proximity of the associate's head to an MD's ass (also known as brown nosing or ass kissing). There are numerous theories as to the physiological processes that create an associate. Much like the pre Columbus belief that the world is flat, the move from simple associate to staffer is officially a matter of achievement and merit. As the physiological explanation of what a staffer is demonstrates, it is the MD's love of getting their ass kissed by a particular associate that creates the staffer. The process is thus more ass kissing then merit related.


The textbook definition of valuation is determining the fair value of a company. As there is nothing fair in i-banking, this definition can of course not hold. Valuation is thus the art of making a selected valuation look fair. Here's how it works. The MD will come to the analyst and tell him to make the value equal £10 billion. The analyst will make this happen (no matter what). The MD will review the work (sole focus will be whether desired number has been generated). If yes, analysis will go to client. If no, analysts will be called in, re briefed and told to go back, do the work again, check for mistakes (which the MD knows are there) and come back when the value is £10 billion. Simple. See A Belated Introduction to Investment Banking.

Friday, April 06, 2007

A Belated Introduction to Investment Banking

What is it really that is done in i-banking and what is it really all about? You know that you are in no position to claim to be an authority of any kind on the matter, so you set out answer this very important question by asking seasoned professionals within the firm. You do the rounds, sneaking in the question over a coffee or a Friday 5pm beer, as the you feel is more appropriate. The list of answers you receive in the end looks something like this.

Rupert Blunderford
Managing Director
Advisory Group

“Investment banking is the art of advising clients. It is not so much what we say that differentiates us here, but when and how we say it. It’s the business of sensing when the client wants to hear what and then making sure one is at the right place at the right time to say the very thing the client wants to hear.”

Edward Shitton-Crapford
Executive Director
United Kingdom Investment Banking

“Investment banking is about two things and two things only. The Code and the Panel. An investment banker is not there to add value to the client. A good client will know from the outset that expecting an investment banker to add any value whatsoever is amateurish at best. The investment banker’s duty is twofold: ensuring that the client is in compliance with the takeover code at all times, and in the process, ensuring the takeover panel is aware of everything the client does. In short, we’re here to check code and act as a glorified secretary, faxing various documents to the panel“.

Paramjeet Shah
Median Investment Banking

“Investment banking is the most important job in the transaction process. We are there to hold the client’s hand through every step of the transaction and to make it all happen. We’re there to think of problems they haven’t thought of and before they can think of them themselves, come up with solutions. We’re there to say what they should pay, who they should buy, when they should do it, where they should do it and so much more. We are the ones who run companies. We tell management what to do – they’re simply drones put in place to execute our advice.”

Isabelle de Golas
Senior Analyst
Consumer Investment Banking

“Investment banking is about making sure everything the client gets is perfect. We provide analysis in spreadsheets, valuations in big models and so on, and it is our job to make sure that all the client sees are pretty looking charts in pitch books that have no errors or typos. Mostly we send the clients profiles of potential acquisition targets and it is very important to use colours consistently, to make sure that the numbers match across all pages of the book, that the multiples are close to what the client has seen thusfar and that there are no typos that the client can spot in the meeting.”

Adam Twinklestein
Junior Analyst
Natural Resources Investment Banking

“Investment banking is about delivering 110%, doing all nighters, functioning on full power at no sleep being spot on all the time to make sure your associate is happy. It’s all about making sure there are no fuckups like typos in the book, booking the print room for the presentations to be printed, making sure the cabbie doesn’t ring the MD’s doorbell when you send him books at 4am, keeping a shaving kit in your drawer so you can still look super sharp even if you’ve pulled an all nighter, and eventually making MD and being a master of the universe.”

You realize that a broad generalization on what investment banking is not possible based on these answers. One thing that these answers do indicate is that the force of gravity even applies in a stellar industry like i-banking. How? Simple. It’s like dropping a ball from a window – the higher you drop it from, the more momentum it gains and the harder it hits when it drops all the way down. Banking is just like that, except, instead of a ball, the system drops shit, be it an MD, and ED or associate, all the shit will hit the analyst. The higher the shit comes from, the harder it will hit. And finally, as sure as the ball, will always land on the ground, the shit will always reach the analyst.

Tuesday, April 03, 2007

The Kruelberg Kretin Saga – Episode VIII: Competence

You’re back at work in the majestic headquarters of the firm, with your feet firmly planted on your desk, as your phone rings.


“Hi Mike, this is Jennifer from HR.”

Shit! They know. How the fuck can they know you’ve seen Blunderstone. Was it a test? Was it a fake interview organised by HR to test your loyalty to the firm? Does the firm have such strong relationships with clients like Blunderstone that they agree to pretend to interview analysts just to help the firm pick out the black sheep?

Erm. No. After a moment of panic, that you realize that your fears are completely unfounded.

Reason No.1:
HR has better things to do. Like go home at 5pm. If they chased every little banker going to do interviews, they would most certainly have to stay far, far, longer, like even until 6pm. As this is truly unacceptable, HR would never do that.

Reason No. 2:
The singling out of black sheep who interview elsewhere is not in the personal interest of HR. The more analysts interview elsewhere, the better the chance that they will move somewhere else, and thus become some other HR professional’s headache. So, HR has no interest in stopping you from moving elsewhere. Actually, the easier they make this, the less people they need to take care of, the earlier they can go home.

Reason No. 3:
Setting up a hoax like this takes time and effort. The first, yes, HR has in abundance, but the appetite for the latter is in tremendously short supply. Why exert effort on something when you can spend that time sipping coffee with your colleagues?

Reason No. 4:
Making it difficult for people to move deprives HR of the fun of the numerous leavers drinks that riddle Friday afternoons after bonus season in the city. Half the revenues of pubs and bars in the square mile are derived from analysts opening tabs for their teams (and HR) to help them selves to anything behind the bar, in a vain effort to make their departure memorable.

Reassured, you answer.

“Hi Jennifer, what can I do for you”

“Mike, there’s been a bit of a mistake with your tax form this month, the system has mistakenly not deducted any tax payments from your salary. We’ll need to rectify that next month, but rest assured, you will not be charged interest. So happy spending!”

You sigh, as you forget reason No.5.

Reason no. 5
HR is plainly and simply no competent enough to pull it off.

Monday, April 02, 2007

The Kruelberg Kretin Saga - Episode VII: Blunderstone

The alarm clock rings and you jump out of bed full of excitement, even though you have any managed to scramble three hours of sleep. It’s 6:35 and you only left the office at three, working on Frank’s stupid precedents (yes, like all things in banking, they took longer to complete than you expected).

You have a shower, get dressed and buy yourself a triple shot cappuccino in the Costa coffee on your way to the tube. You have half an hour to spare and the tube should take only ten minutes, so you’re feeling good. Ordinarily, you would have called a cab, but the problem is, calling one is no guarantee of it arriving on time, specially in the mornings (probable because of all the self respecting bankers who cab into work). So, you decide to take the tube.

There is another reason for taking the tube. Nobody you know would even dream of seeing you in the tube, so if anyone actually does catch a glimpse of you, they will brush it aside as firstly, surely you will not be taking the tube and secondly, surely you would not be up at such an early hour.

You sip on your coffee as you walk from the tube station to Blunderstone’s offices. You pass the buildings that are the home of many a private equity shop and hedge fund along the way. You smile as you enter the lobby, sign in your name and make your way up in the lift, announce yourself again and get escorted into a conference room.

You check your phone, to make sure it’s on mute, and you notice a message form your Rebecca at Assbury Moron:

“You’re meeting Pete Anderson this morning. Don’t give away your contact details. Good luck.”

You first think to yourself how nice of Rebecca to wish you good luck. You then realize that what she’s really interested is that they continue having to deal through her, which is why she doesn’t want you to give them your contact details.

Anyway, your train of thought is broken by the meeting room door opening and Pete Anderson walking into the room. Pete looks more like an insurance salesman than a private equity guy. He’s got a square Amercian jaw and is wearing a button down collar smart casual polo shirt that’s more casual than smart. His chinos are neatly pressed and would have matched his shoes and shirt if he were still in his native New Jersey, Playing ball with his kinds.

“Morning. Pete. Nice to meet ‘ya”

“Good morning” you introduce yourself and wait for him to ask you to sit.

“So, you wanna make the move to private equity” he says with a smug smile on his face. What he’s really saying is “I’m here, you’re there, and you wanna be here where I am, and I have the power to say yea or nay, which makes me very cool”.

“Yes” you give him the whole spiel about how that’s where you want to be long term, that you are driven, motivated, numerically excellent, entrepreneurial, blah, blah, blah, blah and some more blah.

“Great. Mike, you remind me of myself when I was your age” says Pete, as you ask yourself how old is this guy really? He looks thirty five, must have spend a few years as an i-banker, whish means he’s really only thirty. He’s below the age threshold for Botox, so add two extra years to compensate and hey presto, you’re there. So you ask yourself whether it really was that long ago that this joker was in your shoes.

“You’re a great guy and I will recommend that we ask you to come in again and meet more of the folks we have here. One final question: what do you expect to get paid?”

You explain what you’re on now (add a 30% markup of course), and how you would want an improvement on that and a reasonable package of benefits that would come with a job like this. To that Pete smilingly responds:

“Mike, the best way to answer that, is to give you a little comparison. See, when I moved to London from New Jersey, I got the company to pay for my house. Back in the states, I had a huge mansion, with a yard, a porch, pillars, a driveway, a garage for two cars and a SUV, three floors, a pool, and a mailbox. I figured, I’m moving to London, all expenses paid, they’re covering my rent up to 10k a week, so I’ll get a mansion. What do I have now? No yard, no garage, no porch, no SUV, no driveway, no pillars, no mailbox, no pool and only two floors. Yeah, but I don’t live in New Jersey any more!”

Jackass. He wants you to move and take a fucking pay cut just so you can waltz around with a business card that says Blunderstone?

Damn it, you were so close to getting back at Frank. So close, and he’s pulled a fast one again.

Frank fucking Johnson, I’ll get you one of these days!